Skip to main content
number cruncher

What are we looking for?

Sustainable dividends from Southeast Asian ETFs gaining from the resurgent U.S.-China conflict.

The screen

Growing Chinese and U.S. tensions on multiple fronts may force some of their trading partners to choose sides. But Southeast Asia’s expanding economies will likely grow business with both giants.

Quite simply, both of those powerhouse economies increasingly need Southeast Asian exports. In addition to its disputes with the United States, China is more and more at odds with major trading partner Australia; and U.S. manufacturers continue to move production and supply chains out of China to neighbouring countries.

We think the best way to invest in Southeast Asia is through exchange-traded funds. We started with a list of regional funds before applying our TSI Dividend Sustainability Rating System to their top stock holdings. Our system awards points to their overall portfolios based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividends;
  • One point for an industry leader.

ETFs with 10 to 12 points indicate their top stock holdings have the most secure dividends, or the highest sustainability. Those with seven to nine points have holdings with above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated seven Southeast Asian ETFs. (Six are BlackRock-managed iShares, which reflects the limited selection of funds covering the region.) The Malaysia ETF draws on diversified industries, while the Thailand fund gains from manufacturing and tourism. The Philippines continues its rapid shift from agriculture to manufacturing and services. Meanwhile, Indonesia prospers from resources and tourism. Singapore and Taiwan both tap buoyant exporters and high-tech expertise. The Vietnam ETF earns our “below average” rating given the predominance of state-owned enterprises, but the country continues to liberalize its economy. Earlier this month, it ratified a free-trade pact with the European Union.

We advise investors to do additional research on investments we identify here.

Select Southeast Asian ETFs

Ranking*Exchange-traded fundTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Assets (US$ Mil.)MER (%)1Y Ttl. Rtn. (%)Recent Price (US$)
1iShares MSCI Singapore ETFEWS-AAbove Average94.8466.20.50-22.618.90
2iShares MSCI Taiwan ETFEWT-AAbove Average92.63,786.80.5915.840.08
3iShares MSCI Malaysia ETFEWM-AAbove Average73.4321.60.49-14.925.30
4iShares MSCI Thailand ETFTHD-AAverage62.8344.10.59-25.970.11
5iShares MSCI Indonesia ETFEIDO-AAverage51.2322.70.59-27.418.59
6iShares MSCI Philippines ETFEPHE-AAverage50.7119.60.59-24.526.92
7VanEck Vectors Vietnam ETFVNM-ABelow Average30.9336.90.66-16.913.60

Source: Dividend Advisor

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.